Delhi H.C : reference was not to be filed if tax effect is less than Rs. 2 lakhs was very much applicable even to old references which were still undecided

High Court Of Delhi

CIT vs. P.S. Jain And Co.

Section : 256

Deepak Misra, CJ. And Manmohan, J.

ITR No. 179 Of 1991

August  2, 2010

1. This is a reference under section 256(2) of the Income-tax Act, 1961.

2. Heard Mr. Sanjeev Sabharwal, learned counsel for the appellant and Mr. B. N. Goswami, learned counsel for the respondent. It is fairly stated by Mr. Sanjeev Sabharwal, learned counsel for the appellant that the tax impact would be Rs. 1,80,000.

3. In CIT v. Ashok Kumar Manibhai Patel and Co. [2009] 317 ITR 386 (MP), a Division Bench of the Madhya Pradesh High Court has held as thus (page 390) :

“Quite apart from the above, we may also note that this court in the case of CWT v. Dr. Ajad Kumar Jain (HUF), Sagar (W. P. No. 162/98), while taking note of the tax impact and placing reliance on the decision rendered in CIT v. Pithwa Engineering Works [2005] – 276 ITR 519 (Bom), has opined thus :

’11. The factual scenario can be perceived from another aspect. Submission of Mr. A. K. Shrivastava, learned counsel for the respondent is that the tax impact is Rs. 52,565 and, therefore, as per the circular of the Central Board of Direct Taxes the reference need not be adverted to. A Division Bench of the High Court of Bombay in the case of CIT v. Pithwa Engineering Works [2005] 276 ITR 519 (Bom) in paragraph 6 expressed the view as under (page 520) :

“This court can very well take judicial notice of the fact that by passage of time money value has gone down, the cost of litigation expenses has gone up, the assessees on the file of the Department have been increased consequently, the burden on the Department has also increased to a tremendous extent. The corridors of the superior courts are chocked with huge pendency of cases. In this view of the matter, the Board has rightly taken a decision not to file references if the tax effect less than Rs. 2 lakhs. The same policy for old matters need to be adopted by the Department. In our view, the Board’s Circular dated March 27, 2000 is very much applicable even to the old references which are still undecided. The Department is not justified in proceeding with the old references wherein the tax impact is minimal. Thus, there is no justification to proceed with decades old references having negligible tax effect.”

Judged from both angles we would answer the reference in the negative in favour of the assessee and against the Revenue’.”

4. Keeping in view the aforesaid principle, we are not inclined to answer the present reference and accordingly the same is dismissed.

[Citation : 335 ITR 591]

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